Conventional wisdom says that cutting taxes to restrain spending doesn’t work. Raising taxes has political problems of its own. Why not just cut spending? We’re probably going to have to do it sooner or later anyway.
Jason Kuznicki
Jason Kuznicki is a research fellow at the Cato Institute and contributor of Cato Unbound. He's on twitter as JasonKuznicki. His interests include political theory and history.
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If only the government had a nickel for every time a pundit suggested that spending be cut…Report
@carlos the dwarf, …It’d be spending a dime?Report
@Mark Thompson,
A quarterReport
Let’s start means-testing folks for Medicare and Social Security.
Hey, why should I be sending 600 bucks a month to Bill Gates? No, no, no. Too sympathetic. To Paris Hilton? Should our children really be on the hook to pay for her Prilosec?
If we means-test people above a certain wealth level, imagine how much money we could save.
There. That’s my best camel’s nose.Report
@Jaybird, well I don’t know what a camel’s nose is, but I agree completely.Report
@Freddie, there’s an old tale, told in the desert.
A man is in his tent, and the camel says “it is soooo windy out here, the sand and dust is horrible. Please allow me to just put my nose inside of your tent… this will allow me to breathe.”
How could the man argue with that?
And soon there are discussions about the camel’s mouth, eyes, ears, neck, and so on until the camel is inside of the tent and the man is no longer in it.Report
@Jaybird, The general argument against means testing is that these aren’t welfare programs but substitute goods. As such, it isn’t good economic policy to increase the costs of the good, in this case medical care, merely because the person is well-off. In principle, if the well-off person is excluded from receiving that good by virtue of being well-off, then he shouldn’t have to fund it.
In practice, what means testing will do is reduce income taxes. This is because Social Security payments are taxable after you reach a certain threshold. It will also result a larger population of elders becoming eligible for programs such as food stamps.
This is one of those cases where our country would benefit from a developed understanding of social cost and its interplay with personal cost. So much debate about government programs is about shifting social costs internally which can admitedly have its benefits, but it doesn’t actually fix any problems.Report
@M.Z., the variant argument that I’ve heard is that SS isn’t a benefit but *INSURANCE*. Everybody pays into it, everybody benefits from it. It’s a great and grand equalizer, everybody who hits a certain age gets a check. Everybody who hits a certain age gets a doctor. It doesn’t matter if you’re black or white, rich or poor. You just have to be old. We’re all in this together, after all.
And the second that people who are above a particular line are no longer “in this together” (and people will eventually be surprised by how low this bar is now, especially when they thought that only Paris Hilton would end up being excluded), they’ll start questioning the whole program.
(And that’s not even getting into the problems that come up when you start looking at things like mortality rate differences between, ahem, this socio-economic group and that one. Or this gender and that one… and so this group of folks pays a particularly disproportionate amount and that group of folks receives a disproportionately large benefit.)Report
The stuff in there about Canada being able to cut spending by 20% because Canadians trust their government was pretty interesting. Since moving here, I’ve often been told by Canadians that the difference between us and them (aside from the milk bags) is that Canadians are “more fiscally conservative and socially liberal”. I must’ve heard that phrase about twenty times now. I have noticed a fundamental trust in government that certainly makes things easier.
I remember living in a bankrupt county in a broke state in the US in which they kept trying to cut spending, and ran into huge outcries from the populace. It might be easier than raising taxes though.Report
@Rufus,
Rufus, absolutely. For example consider my Canadian home-wasteland the province of Nova Scotia. As we speak the new NDP administration is going into a strict diet of fiscal tightening. They are cutting payroll taxes and replacing them with consumption taxes (Eat your heart out economists) and have committed to an across the board decrease in expenditures on public servants of 5%. Now they claim they can do this through attrition but have committed to and are taking steps to do it through more direct cuts if that doesn’t work out. This is, keep in mind, the NDP who are the left-most of Canada’s major political parties. Now I’m a staunch Liberal but this behavior by them knocked me for a loop, it’d be like if the GOP suddenly sponsored a Pride parade or something.
But to heck with productive politics and milk bags, what I miss in Canada are the Mr. Big bars. I would cut off someone else’s limb to get one of those crunchy chocolaty treasures. Oh or a Big Turk. *Drool*Report
@North, the second I suspect that Canada’s Free Speech/Press protections exceed the US’s, I’m moving up there.Report
@Jaybird,
Yes, well they’ve a way to go there Jaybird. Canada still has the Human Rights Gestapo, I mean Kangaroo Courts err I mean Tribunals. On the plus side I hear they took their gun control registry out behind the woodshed and shot it so gun ownership rights are advancing there at least.Report
@North, it’s all relational.
The US is very much down the road of seeing “well, of course, the Founding Fathers could not have foreseen…” as a reasonable argument to abandon this, that, and the other Amendments.
I reckon we’ll be dumping the First eventually.
For The Children.Report
@Jaybird,
Jay my man, I’m living in the states, don’t say such depressing things. My Mother would never let me live it down if Canada ended up being the more libertine state of the two.Report
@North, By the Heritage Foundation’s accounting, Canada is already ahead of the US on economic libertine-ism. And according to Freedom House’s raw data, Canada scores better than the US on political and civil liberties as well. Soo…….Report
@North, I’m sorry Mark, you just got yourself uninvited from meeting my Mum. She’s American born but moved to Canada when she married my Dad and turned into a Canadian patriot as only an American can and loves picking on me for living in the States.
Canada’s beating the US on both scores? I knew it economically but I’m honestly astonished by the political and civil liberties score. Canada’s considerably more restrictive on both speech and weapon ownership issues, what areas are they more permissive on? I suppose I should just read the entries myself. Good for the Canucks if they are, goodness knows I love ’em.Report
@North, Canadians are definitely more permissive about recreational drugs. Also, same-sex marriage. Not sure what else though, and even I am not sure I’d want to make that trade. Canada doesn’t have anything like the full legalization that I would prefer.Report
Certainly, Jason, look long story short I need to hunt up Freedom Houses’ scoring and see how it all scores out. I’m mightily curious about it.Report
That sentence stood out for me as well. It strikes me that a similar phenomenon plays itself out at the level of elite discourse as well. For example, liberals simply don’t trust conservatives to try and help the poor–I’d say that Jon Chait sums up the left-of-center wonkosphere’s views in this column. As a result, any proposal to means-test social insurance programs really is seen as a camel’s nose, and the end result is that no deal can be struck, even if in a perfect world there would be no objections. I’m sure there’s a similar case on the right, although I’m blanking at the moment.Report
One theory that was advanced at TNR was that this is the beginning of the evolution of an alternative and more shady version of starve the beast, to wit:
-The GOP wrecks the US’s finances by slashing taxes (launching ill advised wars) and running up the deficit then;
-The Democrats get into power and are forced to cut spending to rebalance the budget and get the countries finances back in order then;
-The GOP gets back into power and cuts taxes sending us back into deficits again. Wash, rinse, repeat.
In theory this would have the added value of the GOP getting to hand out popular tax cut candy while the Dems are left to peddle either spending cut brand spinach or tax hike label Brussels sprouts. Now I don’t buy into the idea because this suggests a long view that I don’t think the GOP has as a party (or the Democrats either for that matter).
I do find it interesting though that the same groups who scream about financial responsibility are unwilling to identify what they are willing to cut to achieve said fiscal restraint. Polling shows excellent support for cutting welfare, foreign aid and the arts, fine, eliminate those programs entirely and you won’t have even scratched the deficit. What are the areas where the public are least willing to countenance cuts? Why it’s Social Security, Medicare/aid and Defense, the three largest line items of the federal budget.
The Republican darling Ryan’s budget balancing plan was noticeable in that it actually purported to cut spending AND that the GOP leadership wanted nothing to do with it.
Still, I earnestly hope that Obama actually does turn his attention strongly to spending restraint and fiscal affairs. It is very much in the Dem’s interest to get the books in order. Not only would it make libertarians angry but it’d also make it harder for the Democrats pet programs to be gutted when they eventually are out of power.Report